Covid19 Alert : Keep Social distance and utilize your time by joining CA CS CMA online classes at 30% disc Coupon: SAFE30 Call : 1800-3000-0505

MAT


Dhawal Mohnot (Practicing)     20 April 2010

Dhawal Mohnot
Practicing 
 40 likes  444 points

| My Other Post

During the current year the company has long term capital gain for a substantial amount. I understand that it is exempt u/s 10(38) and there wont be any MAT applicable for the same. Kindly Confirm.

Amir (Learner)     20 April 2010

Amir
Learner 
 724 likes  4001 points

View Profile | My Other Post

Dear Dhawal,

For computing Book Profits under 115JB -

Income exempt u/s 10 has to be excluded except 10(38)...

Now this means though it is exempt but indirectly a company (liable to pay MAT) has to pay TAX on this beacuse it will remain included in the Book Profits...

avater

Dhawal Mohnot (Practicing)     20 April 2010

Dhawal Mohnot
Practicing 
 40 likes  444 points

View Profile | My Other Post

Sir,

 

The Section says that Books profits for this purpose is to be increased by

 

    " The amount or amounts of of expenditure relatable to any income to which Section 10(Other than provisions contained in clause 38 thereof) section 11 or 12 apply."

 

Can u please explain the catch here.

Amir (Learner)     20 April 2010

Amir
Learner 
 724 likes  4001 points

View Profile | My Other Post

Bhai,

The provision which you have mentioned i:e the one related to expenditure is just a harmonious or a consequential provision.

Since "Income u/s Sec 10 {OTHER THEN 10(38)} has been excluded so ANY EXPENDITURE in relation to that income cannot find its place in Book Profit and it has also  to be excluded..

Eg - Dividend of Rs. 1,000 is lying at the credit of P/L A/c & expenditure in relation to that Rs. 50 is debited to P/L/ a/c

Now if u want to exclude this transaction then u have to exclude both the item I mean Rs. 50 as well other wise there will be a mismatch....

If still have any doubt, then pls ask.

avater

Dhawal Mohnot (Practicing)     20 April 2010

Dhawal Mohnot
Practicing 
 40 likes  444 points

View Profile | My Other Post

Then in such a case why at all do we have exemption U/s 10(38) ..... if we anyway have to pay MAT of 15% on long term capital gain . 

Amir (Learner)     20 April 2010

Amir
Learner 
 724 likes  4001 points

View Profile | My Other Post

Bhai,

On a funny sidfe I would say FM can best answer this question...:)

But try an see that not all companies are liable under MAT... so atleast they can make their capital gain exempt u/s 10(38).

Further 10(38) applies to ALL assesees & not only to Companies.

And even if any company is paying MAT on 10(38), it can still have the credit of MAT which can be utilized in later years...

Ya, I agree that taxing 10(38) under 115JB is somethingagainst spirits and truly favours the revenue. 

1 Like
avater

Dhawal Mohnot (Practicing)     20 April 2010

Dhawal Mohnot
Practicing 
 40 likes  444 points

View Profile | My Other Post

Its a very tricky section.Anyways

 

Thanks sir for the help ( As always).

 


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  




Popular Discussion


view more »